Upgrade Gives RIM’s Stock Life, QNX Still the Key

Research in Motion’s (NASDAQ:RIMM) stock has jumped nearly 30% in the last few weeks despite the flurry of naysayers calling for its demise. Sterne Agee recently upgraded RIM’s shares to buy from neutral based on “near term product catalysts” ^[1] and mentions that “mixed to positive” reviews of devices based on the latest BlackBerry 7 operating system is an improvement. Macquarie Securities also had an out of consensus buy recommendation and target price of $29.

We believe the likelihood of Nokia (NYSE:NOK) introducing its first device with Microsoft (NASDAQ:MSFT) overseas will give RIM time to reposition itself in North America. If Nokia decides to launch its devices internationally first where it is stronger, RIM could have more time take share in the US market as the #3 alternative to Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) in the smartphone OS segment.

RIM’s medium-term success hinges on QNX

While we agree with Sterne Agee from a short-term point of view, we support a $43 price estimate for RIM stock based on our sanguine view that migration to QNX in 2012 and solid management of its product portfolio could be triggers for RIM in the medium-term.

This is something we discussed in our earlier note titled What Justifies Our $43 RIM Estimate. Our price estimate for RIM stock is about 45% above market price.

See our complete analysis for RIM stock here

1. Sterne Agee Says Buy; New BlackBerries, Nokia Opportunity, Barron’s, August 26th, 2011 [↩]